ALBERT

Notes: Using data from the Luxembourg Income Study, I study the sensitivity of cross-national income poverty comparisons to the method in which poverty is measured. Absolute poverty comparisons that keep the purchasing power at the poverty line constant across countries lead to conclusions that differ from relative poverty comparisons in which the real value of the poverty line varies with average income. The absolute poverty ranking of countries also varies as the real value of the poverty line is lowered. Cross-national differences in household characteristics are largely irrelevant in explaining poverty differences.

Notes: Using longitudinal data which include real estate wealth, financial assets as well as consumer durables, changes in the distribution of wealth in Sweden are related to major changes in asset prices and in incentives to hold various assets in the 1980s and the beginning of the 1990s. Our analysis of the mobility of wealth indicates that decile mobility is higher in Sweden than in the U.S., while the analysis of who is gaining and who is loosing shows results similar to those of previous studies.

Notes: We demonstrate that the criteria put forward by Atkinson and Bourguignon (1987) can be satisfactorily applied to the analysis of poverty even when the demographic composition of society and the definition of poverty change over time. We show that they provide both sufficient and necessary conditions for any robust conclusions concerning the changes in welfare and poverty. We apply these criteria to a set of data tracking annual income distribution movements in France from 1977 to 1994. The Atkinson and Bourguignon criteria posit that recent changes in poverty are a function of macroeconomic fluctuations in activity.

Notes: This study focuses on the role of foreign-born households in Canada's asset market. An empirical analysis of wealth accumulation is conducted for a large sample of Canadian households circa 1977–84. This study period reflects a change in Canada's immigration policy which resulted in immigration Rows switching from Europe to Asia. A life-cycle framework is used to examine wealth accumulation behaviour of the foreign-born vis-à-vis Canadian-born households. The empirical results confirm the existence of an inverted ‘U’-shaped wealth-age profile for both Canadian and immigrant households. However, the 1977 results show that the rate of wealth accumulation is higher for the immigrant household than the Canadian-born household in pre-retirement years, while the 1984 results reveal the opposite. After retirement, the rate of wealth dissipation is slower for Canadians than for foreign-born households. Only the 1984 results indicate that public social security wealth displaces household savings for both the Canadian-born and the foreign-born by a small amount. Finally, an immigrant household exhibits a stronger transfer motive within a family than a Canadian-born household regardless of year tested.

Notes: This paper investigates the importance of increases in the productivity of producing capital in estimates of the profit rate decline which occurred in the United States during the period 1950–90. We find that, when profit rate measures take into account the increasing productivity of producing capital stock (as measured by the embodied labor required to produce it), the observed decline is about one-half that found using conventional measures of profit. This finding has important implications for interest rate and investment policies.

Notes: In this paper, we present a new model of UK public finances which aims to shed light on recent problems of forecasting the PSBR. The main elements of public spending are treated as endogenous variables which rise in line with GDP over the medium term. Also, the cyclical response of public borrowing to rises in the level of economic activity is more muted when growth is export-led than when it is consumer-led. These two features go a long way towards explaining the rapid deterioration of public finances in the early 1990s and the slow pace of improvement since 1993. JEL classification: C53, E62, H62.

Notes: This paper considers the distributional effects of imposing additional excise duties on energy products according to carbon content. The assumed duties escalate from 1999 to 2010 and achieve levels reducing CO2 emissions by 10 per cent below baseline by 2010 for 11 EU member states. By 2010, real personal disposable incomes are 1.6 per cent above baseline and employment is 1.2 per cent above, assuming that the change is tax-revenue-neutral. The study concludes that the changes will be weakly regressive for nearly all the member states in the study if revenues are used to reduce employers’ taxes and strongly progressive if they are given back lump-sum to households. JEL classification: C53, D12, H22, Q48.

Notes: Competition is being extended into residential utility markets world-wide; the European directives on telecoms, electricity and gas will extend choice throughout the European Union by the turn of the century. In the UK, the Privatisation Acts not only changed the ownership of utilities, but imposed a duty on the regulators to encourage competition. It is the introduction of competition, actual and potential, that has been the main force behind changing the relative prices charged to different consumers, particularly in the residential market. We use household-level data to identify the distributional impact, particularly on vulnerable households and those for whom regulators have special responsibilities. We find a mixed outcome, with some vulnerable households, especially pensioners, adversely affected: we suggest potential compensation mechanisms that could improve welfare by enabling the benefits of competition in these industries supplying essential services to be gained without harming the most vulnerable households. JEL classification: D40, 118.

Notes: This article describes the methods used by the Treasury and other government departments for making forecasts of the public finances. A highly detailed approach is required because of the Treasury's budgetary role, but the aggregated results are subjected to careful ‘top-down’ checks. Forecasts have a necessary role in fiscal policy. But they are subject to large margins of error, and should be presented and used with caution. JEL classification: E6, H1, H6.

Notes: A recurring issue in indirect tax design — most obviously, but not only, for goods traditionally subject to heavy excises — is the appropriate balance between specific and ad valorem taxation. Recent work has developed new perspectives on the issue, which is also one of the oldest in the formal study of public finance. This paper provides a broadly non-technical account of the central considerations that arise in choosing the balance between specific and ad valorem taxation, reviewing and somewhat extending the lessons of theory and experience. There emerge clear presumptions as to the relative effects of the two kinds of tax on such attributes as price, profits, product quality and variety. But the socially optimal balance between them is likely to be quite sensitive to the characteristics of the market at issue. JEL classification: h21, H22.

Notes: 〈blockFixed type="quotation"〉‘No-one ever got rich by passing up golden opportunities and that's exactly what a personal pension offers you. Why?Because one of the beauties of saving for your retirement is that the government actually gives you money — and lots of it — to encourage you … you get back every penny of the income tax you pay on the money you invest.’ Small print: ‘the value of the tax benefit depends on how much tax you pay’.Virgin advertisement, The Guardian, 17 September 1997.〈section xml:id="abs1-1"〉〈title type="main"〉AbstractGovernment support of private (occupational and personal) pensions through tax relief is an important element in the UK's retirement income system. However, the current tax relief system is regressive, lacks transparency and is difficult to control. This paper argues that it should be replaced by a cost-neutral matching-grant or tax-credit scheme. Such a scheme would embody the ‘partnership’ idea implicit in much government policy in this area, but would be much more progressive, more open and more accountable than existing arrangements. The argument is illustrated through a comparison of the cost and distributional impact of the current system with those of an alternative tax-credit scheme. JEL classification: H55.

Notes: This paper investigates the scope for housing wealth to alleviate poverty among Britain's older population by modelling the potential effect of equity-release schemes on the net incomes of older homeowners using data from the 1993–94 and 1994–95 Family Expenditure Surveys. We find that for the older population in general, the potential impact of equity release on poverty is limited by the positive association between homeownership and income in later life. The scope for equity release to enhance incomes is restricted mainly to the oldest age-groups where life expectancy is short. However, it is at these oldest ages that incomes are lowest and although we estimate that equity release cannot provide much benefit to those in the greatest poverty, the additions to income that equity release could bring to some of the oldest homeowners are not insignificant. JEL classification: D31, H55, 132, J14.

Notes: This paper considers the magnitude of the human capital investment required to offset the increase in the inequality in labour earnings in the US economy since 1979. It considers the ineffectiveness of government training policies, the effectiveness of private sector training and the conflict between economic efficiency and the work ethic. It also considers revisions of the tax code. The importance of the distinction between the long view and the short view in analysing human resource policies is emphasised. JEL classification: J24, I28, H40.

Notes: This paper uses data from the two waves of the UK Retirement Survey to present a detailed descriptive analysis of the retirement behaviour of older men. The main motivation for doing this is the fall in the employment rates of older men over the last 20 years. A comparison of the labour market behaviour of men with and without an occupational pension suggests that increases in the coverage and levels of occupational pensions may not be enough to explain the long-term trends in labour market behaviour, but that there are important differences in the retirement experiences of the two groups. JEL classification: J26.

Notes: Expectations regarding the future state of the public finances are vital for public policy formation. The UK experience has been that forecast of the PSBR have been beset with problems since the mid-1980s. Independent assessments of the accuracy and plausibility of public finance forecasts are an important check on government forecasts and serve to increase public debate over government finance issues. We examine the success of various possible methods available to those outside government. JEL classification: E6, H1, H6.

Notes: The level of earnings inequality and its change during the 1980s in Portugal are analyzed, relying on several inequality measures and on international comparisons to generate insight into their patterns. A high level of inequality at the beginning of the eighties is detected, together with a pronounced rise in wage dispersion, brought about by growing inequality at the top. Changes taking place within economic activities, possibly technical progress, are the main forces driving these changes in the wage pattern, while demographic forces, as well as international trade, which could have generated shifts in the demand for labor across economic activities, should be dismissed as explanations for the rise in labor market inequality in Portugal from 1983 to 1992.

Notes: An important application of national accounts is in the formulation of socio-economic policy. This paper starts out with a discussion of the current situation in the Netherlands. Subsequently, it identifies several universal trends (more micro-oriented policy formulation, globalization, the rise of the flexible service economy and the increasing intertwinement of economic, social and environmental policies) and outlines how the national accounts might be adapted and extended so as to enhance its role as the core information system for policy formulation at the macro-and meso-level.

Notes: There are major methodological and practical problems in comparing the performance of capitalist and communist economies. They have been most carefully analysed for the former Soviet Union, for which there was a huge research input, mainly by the CIA. The CIA effort had considerable merit, particularly in assessing Soviet rates of growth. Unfortunately, it was terminated in 1991, partly because it suffered from unduly harsh criticism, partly because its political relevance waned. However, the CIA archives remain an important source for the study of comparative economic growth. It would be extremely useful if they were opened to scholars, a serious loss if they were destroyed.

Notes: This paper analyses how consumption inequality within a fixed cohort grows with age using Japanese household microdata. Following the method developed by Deaton and Paxson (1994), we obtain the following results. First, consumption inequality starts to increase at the age of 40. Second, younger generations face a more unequal distribution from the beginning of their life-cycle. Third, half of the rapid increase in the economy-wide consumption inequality during the 1980s was caused by population aging, while one-third was due to the increasing cohort effect. The paper compares the above results with those of Deaton and Paxson.

Notes: In this paper, we consider reforming the tax system to a comprehensive income tax model in order to amend the differential treatment of income sources. Our simulation analysis shows that the tax reform improves the effectiveness of the tax system on the redistribution of all sources of income including earned income, financial wealth income, and imputed rent. The analysis of incidence of the tax reform suggests that the tax burden for young renters decreases the most and that for young loan-free land owners increases the most through this tax reform.

Notes: A modified version of the perpetual inventory model is applied to new data on consumers' expenditure in the United Kingdom to establish estimates of that part of personal sector wealth represented by the stock of consumer durables. Current and constant price estimates are provided at an aggregate and disaggregate level for the gross and net stock and for the imputed consumption income over the period 1948–95. The accuracy and consistency of the estimates are evaluated in the context of other approaches.

Notes: This paper analyses the behaviour of productive efficiency in the Spanish regions for the period 1964–93. From a growth accounting approach, it describes the regional evolution of total factor productivity (TFP'), based on a private inputs production function. A stricter measure of efficiency is then quantified, which is not equivalent to Solow's residual, since public capital is included in the production function and constant returns to scale are not imposed. Finally, on the basis of the measures of total factor productivity and efficiency, the study discusses the existence of technological convergence among Spanish regions and the role played in it by public capital.The renewed interest in the analysis of the process of growth reflected in economic literature in recent years has also occurred in the case of the Spanish economy, with some peculiarities which are worth mentioning. In the 1980s, two important institutional changes took place: a profound political and administrative decentralization, the regions now being autonomous in many decisions on public expenditure, and the incorporation of Spain into the European Community, which as it is well known has a powerful regional policy. Both changes have meant that the analysis of regional economies, and especially their growth paths, have received much more attention from politicians and economists, and even from the population in general. In particular, intense discussion has taken place regarding the effects of development policies and on criteria for geographical distribution of infrastructures. In both cases, much attention has been paid to discussing their capacity to contribute to convergence among the different regions.As a consequence of this greater interest in the analysis of growth from a regional perspective, efforts have also been made to improve the relevant statistical information. In particular, statistical series have been drawn up for investment and accumulated capital stock in each region, both private and public.' This information, only recently available and the first of its kind, as far as we know, in the European regions, substantially broadens the possibilities of research into the Spanish case in this field, where before not even the simplest exercises in growth accounting could be attempted. Further-more, since the series now available allow the time dimension of growth analysis to be combined with the regional dimension, it is possible to work with a panel of data and apply the corresponding techniques.This article analyses the growth of the Spanish economy over the period 1964–93, during which it can be observed that the per capita income levels of the Spanish regions converged. The objective of the study is to evaluate this process of convergence in income from the perspective of the productive efficiency of the regions, in three different ways. First, Section I considers the importance of the contributions of the private factors of production and of improvements in total factor productivity to the growth of output. Secondly, section II studies the existing relationship between the standard measure of efficiency (Solow's residual or TFP') and a stricter measure when the endowments of public capital are considered. Section III analyses whether or not the convergence in per capita income

Notes: We propose that labor income indices be used to define settlements in many contracts, such as labor contracts, indexed bonds, or income securities. We discuss the issues in producing labor income indices for such uses, and develop prototype indices using US. data from the Panel Study of Income Dynamics (PSID). People are grouped by a clustering algorithm based on an estimated transition matrix between jobs, by education level, and by skill category. The groupings are defined so that few people move between them. For each grouping we generate a labor income index (1968–87) using a hedonic repeated-measures regression method. The indices show substantial variability through time, confirming the potential importance of the use of such indices in contracts. There is also substantial variability across groupings, as for example between the agriculture/labor grouping and other groupings, confirming the importance of using the grouping indices rather than aggregate indices in contracts.

Notes: Household equivalence scales are often used to help perform welfare comparisons across households with different demographic composition. Abstracting from the problems of value judgments and ethical standards, the use of equivalence scales to perform welfare comparisons still faces several measurement problems, namely the identification problem and the endogeneity problem. This paper introduces and estimates an unconditional demand system that simultaneously addresses these two problems. By explicitly considering the demand for leisure, and the fact the household can choose some of its demographic characteristics, we deal with the endogeneity problem and obtain consistent estimates. We identify unconditional equivalence scales by estimating the demand for endogenous demographic variables along with the demand for leisure and consumer goods. More general equivalence scales allowing for better comparability are estimated and used for welfare comparisons.

Notes: This paper uses the PSID to assess the changes in earnings mobility and to compare the changes in cross-section and long-run inequality in the 1970s and 1980s. Previous inequality studies have primarily used measures of cross-section inequality. However, long-run inequality depends not only on cross-section inequality, but also on the degree of earnings mobility, which equalizes earnings over time. I find that earnings mobility increased during the 1970s, but fell during the 1980s. Consistent with this result, the increase in cross-section inequality overstated the true increase during the 1970s, but understated the true increase in inequality during the 1980s.

Notes: This paper discusses how to take assets into account in the measurement of poverty. First asset holdings of current income-poor households are described. Second, the effects on the measured incidence of poverty of two methods to combine income and assets into a single index of economic resources are presented. Third, since the majority of income-poor households do not have assets of much value except for their home, I reconsider the matter of the treatment of housing costs in the measurement of poverty. A method where poverty thresholds are adjusted according to home tenure status is favored, and results of this method are shown. Data are used from the Belgian Socio-Economic Panel, wave 1992.

Notes: In 1991 Statistics Netherlands introduced their early flash estimates of the Quarterly National Accounts. In this article we examine a new, faster flash estimate, some three to four weeks earlier. The gain is made by using a simple regression technique and incomplete data. To compensate for the lack of data, information on the number of working days and shopping days was added to the regression. The inclusion of these calendar aspects significantly affect GDP growth: 0.30 percent point extra GDP growth for one extra working day, and 0.17 percent point for one extra shopping day.The cost of an earlier estimate is a decrease of reliability. The probability of a forecast error of over 0.5 percent point will be about 26 percent, compared to 12 percent for the official flash estimate.

Notes: This paper uses Canadian cross-sectional income and expenditure data to examine changes in the distribution of family income and family consumption during the period 1978 to 1992. Family consumption data are analyzed because in the presence of intertemporal consumption smoothing, the cross-sectional distribution of consumption may characterize the distribution of lifetime wealth. I find that both Canadian family income inequality and Canadian family consumption inequality moved countercyclically. In addition, both Canadian family income inequality and Canadian family consumption inequality trended upward over the period; however, the change in family consumption inequality was much smaller than the change in family income inequality, suggesting that inequality in the distribution of lifetime wealth may have changed much less than is suggested by changes in the distribution of income.

Notes: This paper examines wage differentials at the firm level in Chile and Brazil, using data for 1985 and 1991, and 1987 respectively. The high level of disaggregation in the data available for Chile enables us also to analyze the degree to which wage differentials between individual employers are similar across occupations.The results of this study reaffirm those of previous research pointing to non-competitive explanations for wage differentials, specifically providing clear evidence that inter-firm wage premia are highly correlated across occupations.

Notes: In the past several years, efforts have been made to introduce the 1993 System of National Accounts (1993) SNA) in most of the formerly centrally planned economies. In doing so, a number of problems have emerged, some of which are particular to the situation of these countries. Some of these problems will probably cause overestimates of national accounts variables, others will cause underestimates, and it would be purely coincidental if these effects cancel out. This paper discusses the most disconcerting issues in this situation, and possible solutions.

Notes: Is the decision to become and stay self-employed constrained by access to credit? If this is the case, a more unequal wealth distribution will—for empirically observed distributions–imply more self-employed, since the number of people able to provide collateral will be higher. Swedish data between 1920 and 1992 suggest that wealth inequality and the share of self-employed among those working are positively related. The data, therefore, are consistent with the hypothesis that liquidity constraints are binding on the decision to become and stay self-employed.

Notes: Between and within-households intertemporal inequality indices are proposed to highlight the vertical and lifetime (i.e. cyclical) components of overall intertemporal inequality. Comparison with the classical static inequality indices is made. Income redistribution and smoothing (i.e. stabilization) are conveniently defined as the public policy impact on welfare, by means of the relative increase in intertemporal vertical and cyclical equity, respectively. The issue is important as many public policies are aimed at both (vertical and cyclical equity) objectives. Our approach provides a more appropriate evaluation of the desirability of public reforms aimed at achieving a greater vertical and cyclical equity, within a social welfare framework.

Notes: Young workers in the 1990s can expect greater economic insecurity, as well as lower average earnings, compared to older workers, or compared to the youth of previous decades. The cost of greater insecurity depends upon an individual's probability of unemployment, marginal utility of income gains/losses and the extent to which individuals can smooth consumption over time by borrowing and drawing down assets. Since unemployment insurance cutbacks and higher unemployment have increased the risk exposure of youth, changes in the expected value of their income may understate utility losses as measured by the change in certainty equivalent income.This paper uses a behavioural microsimulation model to compare the impacts of 1971 and 1994 unemployment insurance legislation and unemployment rates in Canada. It calculates both the expected value of income changes and, using a Stone-Geary utility function, the change in inequality of well-being (as measured by certainty equivalent income) for youth and for prime age workers. Both calculations reveal that youth were disproportionately affected by Canada's changing labour market environment. Very few youth have enough assets to finance consumption during spells of unemployment.

Notes: If surveys offer two different measurements of household income, one can use them simultaneously to identify the potential effects of measurement error on the observed-income mobility of the poor. In this paper we investigate transition tables between subsequent income states. Latent Markov models are used to model incorrect classifications of income states. Misclassifications are interpreted as measurement error or spurious changes that are not consistent with a simple transition table model. The empirical results for the German Socio-Economic Panel (GSOEP) show that the observed transition tables overestimate the mobility between poverty states.

Notes: Poverty comparisons—an increasingly important starting-point for welfare policy analysis-are almost always based on household surveys. Therefore they require that one be able to distinguish underlying differences in the populations being compared from sampling variation: standard errors must be calculated. This has typically been done assuming that the household surveys are simple random samples. However, household surveys are more complex than this. We show that taking into account sampling design has a major effect on estimated standard errors for well-known poverty measures. In our samples they increase by around one-half. We also show that making only a partial correction for sample design (taking into account clustering, but not stratification, whether explicit or implicit) can be as misleading as not taking any account of sampling design at all.

Notes: This paper considers the problem of deflating an input-output table from the viewpoint of the user. In many practical cases certain margins of this table are readily available in constant prices, whereas the entire table is not. This reduces the problem to estimating the matrix of sectoral intermediate deliveries in constant prices. The traditional approach for this purpose is based on the double deflation method. Since double deflation is sensitive to aggregation, however, it typically does not provide correct answers. Therefore, a heuristic approach is proposed as an alternative. It is based on the biproportional projection method. An empirical evaluation indicates that the heuristic approach clearly performs better.

Notes: Most of the literature on income distribution has concentrated on inequality. In this paper we introduce a concern for efficiency in a social welfare model. We propose a simple but useful specification which combines three features: (i) the selection of measurement instruments in the relative and the absolute case on the grounds of their properties for applied work; (ii) a procedure to make welfare comparisons across households with different needs, in a model in which equivalence scales depend only on house-hold size; and (iii) the use of household specific statistical price indices to make intertemporal comparisons in real terms. The methodology is applied to the study of the role of prices and demographic effects in the evolution of the standard of living in Spain from 1973–74 to 1980–81.

Notes: This paper uses microeconomic data from the British Household Panel and General Household Surveys to describe how the distribution of pay differs between the public and private sectors in 1983 and in the early 1990s. Separate analyses by gender and education group reveal that it is women and those with intermediate-level qualifications who do best in the public sector. The large differences between the shapes of the conditional (that is, holding age and education constant) distributions of wages in the public and private sectors are demonstrated using quantile regressions estimated separately for each education group. The paper also exploits the longitudinal structure of the data used to assess how much of these differences can be explained by the unobserved characteristics of individuals. JEL classifications: J31, J45.

Notes: The golden rule of public finance is based upon the notin that intergenerational equity requires that the cost of public expenditures be spread over time in a manner that reflects the intertemporal distribution of the benefits generated by those expenditures. This is often translated into a rule that the budget be structurally balanced in accrual accounting terms. This article considers the form of accrual accounting that is most suited to the task of measuring the consistency of fiscal policy with the golden rule. It recommends a combination of the real capital maintenance approach (also known as ‘current purchasing power accounting’) and annuity depreciation. Such an approach differs from ‘current cost accounting’, which has dominated public sector models of accrual accounting in recent years. The meaning of balance-sheet measures is also considered, and it is concluded that the golden rule is more appropriately expressed as an accrual balanced budget requirement than as a requirement for the maintenance of constant net worth. JEL classification: H6, M40.

Notes: This paper applies modern concepts from the theory of public goods to indicate why progress has been made with respect to some global and regional public goods (for example, cutting sulphur emissions) but not with respect to others (for example, cutting greenhouse gases). Factors promoting collective action at the transnational level include the removal of uncertainty, a high share of nation-specific benefits, a limited number of essential participants and the presence of an influential leader nation. The impact of public good aggregation technologies on the future provision of transnational public goods is related to the trend in world-wide income inequality. Principles are presented for designing supranational structures for addressing transnational public good problems. JEL classification: H41, D70, Q20.

Notes: The newly elected Labour government has pledged to ‘reinvigorate the Private Finance Initiative’, as part of the new emphasis on ‘public/private partnerships’ in the delivery of core public services. This article assesses the merits of using private finance to deliver public services against three criteria: whether it will lead to additional investment in social infrastructure, whether it represents good value for the taxpayer's money and whether the use of private finance will reduce the public sector's flexibility to pursue its public service objectives. JEL classification: H54, H11.

Notes: This paper uses two waves of the UK Retirement Survey to look at how incomes change during retirement. We concentrate on men aged 65–69 and women aged 60–69 in 1988–89 and look at how their incomes change over the following five years. Overall, we find a considerable degree of stability in real incomes. We use the panel data to look at the incomes of widows before and after they are widowed and find that, for this group of relatively young widows, their low incomes are in large part determined by the fact that it tends to be the relatively poorer husbands who die among this age-group. Finally, we consider the most important component of private income — occupational pensions — separately. We find a strong relationship between pension level and the probability of indexation — pensions that start low are less likely than higher pensions to keep up with inflation. JEL classification: D31, H55

Notes: This paper examines the arguments for changing the ways that UK drug prices are regulated. In the UK, NHS pharmaceutical expenditures on branded drugs, currently worth about £3 billion a year, have been regulated by the Pharmaceutical Price Regulation Scheme (PPRS) since 1978. We argue that, in publicly funded healthcare systems, pharmaceutical price regulation is necessitated by a tendency towards excessive government expenditure because of over-prescription and the monopoly power of firms with on-patent drugs. We briefly explain the operation of the PPRS. which is based on rate-of-return regulation, and discuss its merits and drawbacks. We then consider five alternative pricing systems: free pricing, therapeutic benefit pricing, international reference pricing, therapeutic reference pricing and RPI - X price regulation. However, we reject all these alternatives in favour of a reformed PPRS. We suggest three potential reforms of the PPRS: an RPI - X cost allowance if feasible or a widening of the rate-of-return bands otherwise; the introduction of a marketing innovation allowance; and greater regulatory transparency. JEL classification: L5, L6, D4.

Notes: This paper examines the asset positions of households at and around retirement in Britain using the Retirement Survey ‘waves’ of 1988–89 and 1994. The data provide the first panel evidence on retirement behaviour and asset evolution for a sample of older households in Britain. The analysis in this paper shows the importance of housing and private pension wealth for this age-group in Britain, and also the differential wealth holdings between surviving respondents and those who died or failed to respond for other reasons in 1994. It provides some preliminary evidence as to whether households decumulate assets after retirement in accordance with the ‘textbook’ version of the Life-Cycle Hypothesis of consumption.

Notes: The 1986 Social Security Act introduced far-reaching changes to the supplementary pension environment in Britain, encouraging the growth of defined contribution pension plans and especially personal pensions. This paper examines the pattern of supplementary pension coverage of employees in Britain five years after the implementation of the Act, using cross-sectional data from the Family Resources Survey 1993–94. Two-thirds of employees in Britain are covered by private contracted-out pension scheme. Employer-provided defined benefit pension schemes remain the dominant type of supplementary pension scheme. The growth of personal pension plans is more marked among manual, less-skilled, workers in smaller establishments. The paper concludes that, in the absence of further pension reform, adverse labour market conditions will exert downward pressure on private pension coverage. JEL classification:I38, J32, J38.

Notes: Starting in 1998, the electricity market in England and Wales will be opened up to full competition, and all consumers will be allowed to choose their electricity supplier. This promises to result in lower prices, but there will be additional transactions costs exceeding £100 million a year for the first five years. Relative to a counterfactual without competition, there are likely to be large transfers from electricity companies (and the coal industry) to consumers, but the companies lose more than consumers gain. This conclusion might be reversed if competitive pressure leads to significant additional cost savings in the future. JEL classification: L94

Notes: In this study we consider two panels of wage-earners, from 1974 to 1988, for Italy and France respectively. The international perspective and the availability of micro-data are particularly interesting for they allow us to address individual characteristics as well as national specificities. In the empirical analysis a partitioning of the earnings distribution by deciles is used and the overall hierarchical mobility of individuals is investigated. Transition matrices are computed in order to compare wage formation and mobility processes across countries, in the period under investigation. A rich battery of mobility indices is presented and the relations between them are studied.The paper addresses several different issues and compares the results across countries. First, the evolution of earnings and the relative wage profiles are compared across countries. Second, the heterogeneity issue is addressed and some structural characteristics of the sample are studied, namely: cohort and gender differences in earnings.

Notes: To account for the fact that a household's needs depend on its size and composition most studies on income inequality adjust the observed household incomes by equivalence scales. However, since the rationale for choosing a specific scale is rather vague the importance of testing the sensitivity of income inequality estimates to choice of equivalence scales has long been acknowledged. The sensitivity studies in the literature are restricted to equivalence scales that do not depend on the income level of the reference household which means that the effect of a rise in the household size on the scale rate does not depend on whether the household is poor or rich. By using Norwegian micro-data it is shown that the introduction of an income-dependent scale produces results that are in conflict with the widespread view of robustness of results to choice of equivalence scales.

Notes: Over the last twenty-five years local governments in the United States and Canada have increasingly used impact fees and other development exactions as methods of financing capital and infrastructure requirements mandated by residential growth. While several studies have examined the effects of impact fees on housing and land prices, rigorous empirical analysis of their effects on residential development is lacking. In this paper a sample of all municipalities in DuPage County, Illinois from 1977 through 1992 is used to examine the effects of impact fees on the rate of residential development. The empirical results show that impact fees reduce rates of residential development by more than 25 percent.

Notes: Previously it was reported that regional variations in well-being (poverty, per capita income, and family income) among Appalachian counties did not originate from regional variations in urbanization, but from regional differences in well-being among nonmetropolitan counties. It was argued that southern Appalachian counties had higher levels of well-being at the end of the 1980s because nonmetropolian counties in southern Appalachia experienced greater economic growth during the 1980s than did nonmetropolitan counties in other Appalachian regions. In this paper these data are reanalyzed to test to what extent the original findings are affected by the presence (and failure to control) spatial autocorrelation. Using a spatial lag model it is shown that correcting for spatial autocorrelation statistically altered the original results. However, substantively, the conclusions from the original analysis did not change: regional differences in county well-being in Appalachia are largely the product of regional differences among nonmetropolitan counties, even after correcting the model for spatial autocorrelation.

Notes: Several recent studies have challenged the conventional notion that raising the minimum wage has negative labor market consequences. In particular, most recent minimum wage research has considered teen employment, with virtually no examination of unemployment rates. Given the conflicting findings in the recent literature, this study reconsiders this issue by examining the minimum wage's influence on teen unemployment rates. The empirical analysis considers state data from the latter 1980s, a unique period where many states raised their minimum wage above the federal level. The results suggest that both a greater minimum wage rate and greater minimum wage coverage increase teen unemployment rates. Further evidence suggests that employment declines outweigh teen labor force reductions, suggesting that increases in unemployment are primarily caused by labor demand shifts. Thus, policy makers should weigh these costs in deciding future minimum wage hikes.

Notes: The purpose of this study is to analyze the effects of transportation investment on the Korean economy using the dynamic Computable General Equilibrium model. The result of the counterfactual analysis shows that infrastructure investment policy has the advantage of economic growth, but the disadvantage of price inflation. The elasticities of infrastructure investment with respect to GDP, export, private utility, and inflation depend on institutional restrictions on the domestic inflow of foreign capital and financing alternatives for infrastructure projects. The growth effect of transportation investment would be maximized if regulations on inflow of foreign capital to the private sector were lifted. On the other hand, the effect of transportation investment on inflation would be minimized if transportation investment expenditure were completely financed by tax revenues.

Notes: Book review in this article:The Death of Distance: How the Commltnications Revolution Will Change Our Lives. By Frances Cairncross.The Dynamics of Industrial Location: the Factory, the Firm and the Production System. By Roger Hayter.The Japanese City. Edited by P.P. Karan and Kristin Stapleton.Globalization and Neoliberalism: the Caribbean Context. edited by Thomas Klak.Regions And The World Economy: The Coming Shape Of Global Production, Competition And Political Order. By Allen J. Scott.

Notes: Within the last decade, a considerable literature has emerged on the growth and location of producer services employment in North America, and in the role of labor market characteristics in shaping these changes. One of the outcomes of this research has been the realization that producer services are overwhelmingly concentrated in metropolitan areas, and that there is a strong core-periphery dichotomy in the representation of these activities. This paper explores the labor market characteristics of a set of producer service activities within the peripheral urban hierarchy of Saskatchewan, Canada, dominated by the regional cores of Saskatoon and Regina, and surrounded by ten peripheral regions. The data set was provided by Employment Canada, and divided into Canada Employment Centre (CEC) Areas. It was found that the higher order producer services, such as Finance and Business Services, are significantly underrepresented relative to the rest of Canada, while others, such as Services to Primary Producers and Transportation and Communications, are significantly overrepresented. However, the nature of these services, as reflected in their labor market characteristics, are very different. Gender and the role of part-time labor appear to be distinguished on the basis of the specific producer service sector, with very few distinctions across space. On the other hand, differences in the roles played by part-year labor is less related to the sector and more related to position within the peripheral hierarchy. Although the heartland-hinterland model is usually applied at national or even international scales of analysis, the nature of the segmentation of the producer services labor force, and its relationship to urbanization and development of the sector, imply that the model can in fact be used as a fiamework for analyzing intraregional employment relationships within the periphery. This study highlights the nature of the labor force as one aspect of this framework.

Notes: Many states are striving to meet public demand for accountability by “benchmarking”—setting social goals for the state and tracking progress in meeting the goals. However, states are finding it difficult to set realistic targets and to assess the impacts of policy on achievement of the targets without a framework that models the relationships among policy targets, policy actions and social and economic forces outside the control of policymakers. This paper develops a dynamic simulation model of one “benchmark” (poverty incidence) in Oregon, linking transitions into and out of poverty to various events (increased earnings, or having a child as a teenager, for example), and linking these events to policy. The simulation results suggest that, with current policies, Oregon will come close to achieving its poverty benchmark target of 11 percent by the year 2000 if economic conditions remain favorable. The model is used to examine the impact on poverty incidence of three policy strategies: reducing high school dropout and teen pregnancy rates, increasing the effectiveness of social support programs to JOBS participants, and boosting job growth. The simulation results suggest that when assessing the state's performance or “grading” the observed trend in the poverty benchmark, policymakers should take into account the performance of the state (and national) economy. The impact of policy efforts to reduce poverty is limited because many poverty spells are caused largely by events not affected by current state policies.

Notes: The argument in principle for pricing the use of road space rests on firm intellectual foundations. The necessary technology is readily available. Public acceptance of the idea, with the concomitant need for investment in new roads, is subject to much confusion, reinforced by Nimbyism on one side and Swampyism on the other.

Notes: Improved road pricing would be an indispensable element in a road system run on commercial principles, with charges for road use not co-mingled with taxes, and with no discrimination against private road providers. But pricing imposed by a monopoly supplier, to ‘restrain’ motorised mobility, is unacceptable in a free society.

Notes: Attitudes to road pricing at last are showing signs of change. In addition, the existing road-building and public transport lobbies are now becoming matched by the growth of information technology. Development from now on must be at local level, and the time is now ripe to re-examine the interests involved so as to maximise satisfaction.

Notes: The key issues concerning road pricing are now well understood, and they must be addressed at local level if the policy is to be saleable.This means that objections to pricing need to be addressed at local level.Experience abroad suggests that equity and the use of the resulting cash flow are likely to be the most significant points that would need to be addressed.

Notes: There are several good reasons why motorists should be charged for using roads, and it is important to understand these and to distinguish between them.Alternatives, however attractive, fail to stand up to close scrutiny. The change of government attitude showed in the recent White Paper is to be welcomed, but of the three specific proposals, two are questionable. Road pricing should not be used as a major welfare tool.

Notes: The recent White Paper indicates the start of serious attention to the use of road-use pricing, while the hard edge of the argument is to be found in the Treasury's Comprehensive Spending Review. What has yet to be examined is the problem of equipping the nation's vehicles with the necessary devices, effective for the purpose over the whole country. This could be done by replacing the paper ‘tax disc’ with a standardised electronic tag - carrying stored credit-units - which could provide for road-use payments as and where they come to be introduced.

Notes: The concept of the single currency, to be adopted by the majority of the members of the European Union, is difficult for the general public to understand because of the lack of coherence of the objectives of its advocates (bureaucrats, ex-bureaucrats, academics, labour leaders, multinational business, and politicians). The general economic arguments for the single currency do not add up. Europe is not an ‘optimal currency area.’ A one-size-fits-all monetary policy will impose great strains. It is not necessary for Britain to participate in this enterprise. Britain does not need the euro, any more than Canada needs the US dollar. The ideal role for Britain is to be at the margin of Europe as the interface between Europe and North America

Notes: The degree of freedom or coercion in society affects the ability to build buildings and to create architecture of distinction. This paper explores the ways in which modern democratic societies have reduced classic property rights, and thus reduced an owner or developer's ability to build as he judges best for his own needs or his customers. A brief description is given of free market alternatives to existing statist regulatory approaches to property and land-use regulation.

Notes: The article questions the myth of inequality and elitism on the grounds of tuition fees in higher education. It argues that the key to a successful transformation in higher education lies in the ability to provide ‘high quality products,’ driven by independent charges or fees and an equitable loan finance system. Unless these conditions are met, the author predicts an overcrowded university system and falling academic standards.

Notes: Book review in this articleEconomic Analysis of Property Rights (2nd edn.) Yoram BarzelA Critique of Orthodox Economics: An Alternative Model Harold LydallThe Myth of Adam Smith Rashid SalimThe Wealth and Poverty of Nations David LandesBritain's Economic Performance (2nd edn.) Tony BuxtonPositioning Pensions for the Twenty-first Century Michael S. GordonThe Power of Ideas: The Heritage Foundation at 25 Years Lee EdwardsThe March of Freedom: Modern Classics in Conservative Thought Edwin J. Feulner JrHeart of Freedom: A Life - A Love of Liberty William L. LawA Step-By-Step Guide to Strategic Planning: What Every Manager Must Know George A. SteinerThe China Miracle: Development Strategy and Economic Reform Justin Yifu Lin, Fang Cai and Zhou LiReining in the Dinosaur: The Story Behind the Remarkable Turnaround of New Zealand Post ivienne SmithCentral Banking and Banking Regulation Rosa Maria LastraBritain at the Crossroads Russell Wood

Notes: Within the context of ‘the engine of globalisation,’ Sperling explores the rigidities and inefficiencies in ‘traditional’ American higher education institutions. He points to the ways in which the for-profit university can overcome these problems, while at the same time being a net contributor to the tax system. In particular, he suggests that it is the profit motive that makes the University of Phoenix responsive to its its customers, and technologically innovative.

Notes: Lord Dearing focuses on the globalisation of higher education, and the potential role for UK institutions within this movement. The trend is of increasing global competition, but for a growing market. Issues raised include the role of private-sector institutions in this market, the maintaining of high standards, the importance of life-long learning and the place of information and communications technology. Lord Dearing concludes with recommendations as to how government and institutions themselves could respond to the challenges and opportunities that globalisation brings.

Notes: NIIT is a highly successful for-profit education company with global reach, which grew by capitalising on the failings of the Indian state education system to provide employable graduates in computer education. Dr Mitra describes the company, then explores the changing forms of universities, the rôle of the private sector in these and the challenges of the future. He concludes by outlining how the ‘NIIT Academy’ is emerging as a possible model for universities for the next century.

Notes: West keeps score of the continuing and growing inadequacies of the British student loan scheme to 1998 and shows how an income-contingent loan could better satisfy its aims. He explores a common objection to any form of student loan scheme, that students pay for their university education through progressive income taxes. West shows how this argument falls short, and hence that some form of income contingent loan is required if equity and efficiency are to be satisfied.

Notes: Using data from the International Finance Corporation study on private investment in education, Tooley and West give details of two types of international experience with student loans. In particular they look at the government student loan scheme in Thailand and loan schemes offered by various for-profit and nonprofit education companies in Peru, Colombia and India. Difficulties are pointed out with regard to the government scheme, which it may be possible to alleviate under the company schemes.

Notes: Higher education funding arrangements remain unsatisfactory. Central government's price controls over the services which universities offer threate both autonomy and quality. The best UK research universities can no longer compete with their counterparts in the United States and elsewhere. This article proposes a return to private status for universities, allowing them to form a contractual relationship with government for teaching and research, with freedom to charge an additional market price for their services to privately funded and overseas students.

Notes: Antony Fisher, a great entrepreneur, was inspired to found the IEA after Hayek had advised him that, to change society, the intellectuals must be persuaded by reasoned argument. He established many similar institutes around the world. 1998 is the fiftieth anniversary of his first book, The Case for Freedom, which still has lessons to teach us.

Notes: This paper applies the theory of optimum currency areas to the question of which countries could be expected to be successful members of EMU if the monetary union does not include Britain, and is therefore led by the Bundesbank. Correlation matrices are prepared for potential members of EMU for recent years to see which countries would have tended to agree on a monetary policy and which would frequently disagree. The statistics strongly suggest that the Bank of England would be a far more successful leader of EMU than would the Bundesbank. Only Austria and the Netherlands have had macroeconomic cycles which closely follow those of Germany. Far more countries have had cycles which parallel those of Britain. With EMU being led by the Bundesbank, because Britain has not joined, the prospects for monetary union are quite poor.

Notes: Book review in this articleNot Just for the Money: an Economic Theory of Personal Motivation Bruno S. FreyWhat Money Can't Buy Susan E. MayerAn Uncertain Legacy: Essays on the Pursuit of Liberty Edward B. MacLean (ed.)The Origins of Virtue Matt RidleyJapan and the Globalisation of European Integration Thomas Bourke